Philippine gaming slump to continue – FMIC
Iris Gonzales (The Philippine Star) - November 29, 2015 - 9:00am

MANILA, Philippines - The Philippine gaming slump is expected to continue amid the prevailing slowdown in gaming activities in Macau, according to First Metro Investment Corp. (FMIC), the investment arm of George Ty-led Metro Bank Group.

In a report, FMIC said the Philippine gaming market is still highly correlated to Macau gaming.

“Listed Philippine casino and hotel operators have seen their share prices decline by more than 50 percent year-to-date despite consolidated gross gaming revenues in the country increasing by a fifth in 2015,” the report said.

This development reflected the situation in Macau, previously known as Asia’s major gaming destination.

Macau’s 10-month gross gaming revenues (GGR) have declined for the 17th straight month by 35 percent as its VIP market continued to fall in the face of China’s anti-corruption crackdown.

GGR of Macau’s casinos continued to decline despite Macau’s observance of the Golden Week holidays in the first week of October, which had traditionally seen greater casino foot traffic.

Casino operating giant Melco Crown also opened a $3.2 billion casino complex in Macau last month.

These two developments, however, were not enough to push gaming revenues upward.

The government of Macau continues to implement strict measure on the back of a nationwide crackdown on corruption.

It now requires junkets to disclose records and staff background checks and has imposed smoking ban on casino VIP rooms.

“The second round of restrictions weaken the business outlook in Macau and could keep the so-called “Macau-led contagion” overhang on Asian gaming capitals, including Manila, where investors sentiment toward gaming stocks has soured,” FMIC said.

FMIC said the expected spillover of Chinese VIP business into the Philippines did not happen because of the territorial dispute over the South China Sea and the Philippines.

“However, the business volume disappointed as the strict crackdown by the Chinese government deterred VIP players from gambling here with some of them going to Singapore, instead, another Asian upscale VIP destination. In addition, the territorial dispute over the South China Sea has discouraged some VIP players to visit the Philippines. Lower revenues, higher operating expenses,” FMIC said.

Despite the prevailing environment, local casino operators are optimistic things will improve next year.

Solaire operator Bloomberry of ports tycoon Enrique Razon expects an earnings recovery by 2016 as it provisions the unpaid credits granted to VIP players by year-end.

Likewise, the joint venture of Melco Crown and Premium Leisure, behind City of Dreams, remains to be on a ramp-up stage until next year, but expects to post a profit as it further grows its revenues from the gaming and non-gaming segments.

“Both gaming and retail operations will be in full blast next year so a revenue boost is anticipated,” FMIC said.

Travellers is also set to recover too as it joins the Entertainment City group as early as 2018.

“We expect decreasing market share for Resorts World Manila (located outside of the Entertainment City) in Paranaque as gamblers transfer to the Entertainment City complex. These integrated resorts have started to alter strategy by growing the revenues of the mass segment. However, this shift will generate lower (compared to the potential offered by the VIP market) but stable revenues in the long-term,” it said.

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